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also known as capitalism,
is an economic system in
which anyone is free to
start a business.
government plays a
somewhat limited role
as a producer, consumer,
and regulator.
Characteristics of a
Free Enterprise System
Productive resources are privately owned.
Individual choice and voluntary exchange
drive the economy.
Business owners are free to decide how
to use their resources.
Workers are free to decide where to work.
Consumers are free to buy what they choose.
A free enterprise system has open opportunity
for all.
Requires legal equality of each person's economic rights.
The profit motive propels business owners to enter markets.
The free enterprise system rests on the free contract -- the voluntary exchange of money or labor.
When a business is successful, profit seekers will enter into those markets and allocate their productive resources.
Before long, the competition among the profit seekers drives down prices of goods and services as each seeks to attract customers.
Consumers "vote with their wallets," and companies that do not meet consumer needs will not survive.
Projects 2 & 3
the government
provides services, natural resources, and takes in $$, tax revenues.
the government buys
some products and
services from the
product market and
some factors of
production, especially
labor.
Finished
Free Enterprise
1. OPEN OPPORTUNITY: the ability of anyone to enter and compete in the market by his/her own free choice.
2. LEGAL EQUALITY: everyone having the same economic rights under the law.
3. FREE CONTRACT: everyone having the right to decide freely which legal agreements to enter into.